California Designates 6 Innovation Hubs to Sharpen State's Competitive Edge

Stalled by the economic recession, California designates research clusters of companies, nonprofits and universities to stimulate innovation through collaboration and create jobs.

by / February 19, 2010

No amount of brainpower or world-class technology could save Silicon Valley last year from the wrath of the recession.

In the San Francisco Bay Area's high-tech hub, the economic downturn caused jobs, patents and venture capital investment to decline in 2009, according to a study released in February by Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation. The survey, titled the "2010 Index of Silicon Valley," also shows office vacancy at its highest rate since 1998 as the focus has shifted from software to green energy, the media, biotech and medical devices.

With the loss of 90,000 jobs between the second quarters of 2008 and 2009, the cutting-edge innovators of Silicon Valley "could not insulate ourselves from the larger economic downturn," said Russell Hancock, Joint Venture president and CEO, and Silicon Valley Community Foundation CEO Emmett Carson, in a joint statement.

"At a time when we need to engage more actively in the global economy, the very foundations for that engagement are weakening," according to the statement. "We're disinvesting in education and we're not cultivating talent. Our state is no longer able to make crucial investments in infrastructure. Gridlock in Sacramento has become a major barrier to our ability to compete abroad and solve problems here at home."

Faced with California's budget crisis and the soaring unemployment rates, the state's Business, Transportation and Housing Agency (BTH) has launched the California Innovation Hub (iHub) initiative, a program designed to enhance the state's competitiveness on a national and global scale by stimulating partnerships, economic development and job creation around specific research clusters.

Partnerships to Span State

The six inaugural iHub memebers are Orange County, Sacramento, Coachella Valley, Northgate, i-GATE (Innovation for Green Advanced Transportation Excellence), and San Francisco Biotech.

"We don't do innovation," said Eloisa Klementich, the agency's deputy secretary of economic development and commerce, referring to BTH. "We're not the scientists that are driving it. So the question is how do we create the ecosystem for innovation to occur?"

The effort to create that infrastructure started about nine months ago. The idea was to find key areas across the state with assets such as research parks, technology incubators, universities, community colleges, business accelerators and federal laboratories. After several meetings and an application process, BTH recently announced six areas designated as iHubs:

The main component of the program is collaboration. By building a network of cutting-edge companies, forward-thinking organizations and research institutions across the state, Klementich said, California will benefit from greater exposure, smarter partnerships, more jobs and a fusion of new ideas that would establish the state as a global innovation powerhouse.

But again, there's the issue of money. The recession rages on and, at this point, the iHub program has no federal funding. But BTH will be "aggressively applying for federal grants," Klementich said.

"Now we have an infrastructure to put that funding into," she said. "When that money becomes available, we'll be first in line to apply."

The lead organization for the Orange County iHub is OCTANe, a nonprofit organization that fuels the area's technology sector through educational programming, business acceleration, job connections and university partnerships.

OCTANe felt the impact of the recession last year as the amount of sponsorships decreased. But at the same time, the organization's membership increased, and the unemployment rate created a demand for job support and financial strains motivated universities to turn to OCTANe to help license technology, said Matthew Jenusaitis, the organization's president and CEO.

While the iHub designation doesn't mean his organization will receive any funding yet, he said, the program will give the area greater visibility and help form productive partnerships with key players statewide.

"I really believe that technology and innovation will ultimately be what helps us recover from the economic recession," Jenusaitis said. "This state needs that more than anybody."

BTH plans to hold annual forums for communities to come together to share progress and exchange strategies. The iHub designation lasts for five years, after which an organization can apply for renewal. Over time, Klementich hopes have many more iHubs across the state.

So why didn't Silicon Valley make the cut? Outside of San Jose, Klementich said, Silicon Valley didn't submit an application.


Russell Nichols Staff Writer